Medivation Up 140% In One Day, While Dendreon Gets Quartered

 |  Includes: AZN, DNDN, MDVN
by: David Zanoni

Medivation (NASDAQ:MDVN) experienced a victory on Thursday after its Phase III clinical trial demonstrated that its drug, MDV3100 helped prolong the lives of advanced prostate cancer patients by 4.8 months. Medivation’s next step is to meet with U.S. regulators to set up a regulatory approval filing date. Meanwhile, Dendreon (NASDAQ:DNDN) reported that sales of its prostate cancer drug, Provenge have slowed. Medivation’s stock price more than doubled in Thursday’s trading, up 140%. Dendreon’s shares took a 37% nosedive.

Dendreon’s negative news came from its third quarter report on Wednesday, when it stated that previous expectations for Provenge sales of $400 million in 2011 would not be met. Dendreon first announced its lowered expectations for Provenge sales back in August, and CEO Mitchell Gold reiterated yesterday that the pattern will continue into 2012.

The obstacles for Dendreon include a price of $93,000 for the treatment of Provenge. Medicare has been covering it since the end of June 2011. However, Dendreon stated back in August that concerns about reimbursement were hurting sales. There is also concern from doctors and patients that Provenge does not provide impressive survival benefits. Analysts now expect Provenge sales for 2011 to be 43% less than they originally predicted. They’re also now expecting 2012 sales to be 57% less than their original estimations.

Medivation’s MDV3100 suppresses male hormones that fuel cancer and does so more completely than Astra Zeneca’s (NYSE:AZN) Casodex. Previously, men with prostate cancer who failed chemotherapy went right to hospice – now they’ll have an alternative treatment. MDV3100 is an oral drug to be taken once daily.

Medivation also has a late stage drug called dimebon in its pipeline. Dimebon is in Phase III clinical trials for the treatment of Alzheimer’s disease. In preclinical studies, dimebon has been shown to protect brain cells from damage and enhance brain cell survival.

I wouldn’t want to jump into Medivation stock immediately after a 140% rise in one day. It is also difficult to value the stock since its drugs are not yet FDA approved. We don’t yet know what the price of MDV3100 will be.

We can, however, look at some prostate cancer statistics:

  • About 1 in 6 men will be diagnosed with prostate cancer during his lifetime.
  • About 240,890 new cases of prostate cancer will be diagnosed in 2011.
  • About 33,720 men will die of prostate cancer in 2011.
  • About 1 in 36 men will die of prostate cancer.

These statistics show the opportunity for Medivation’s MDV3100 for its possible life extending benefits. Its future does look bright – I would just wait for a pullback in the stock before jumping in.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.